Why Pay Equity Should Be Every Food, Agribusiness and Beverage Leader’s Priority

Why Pay Equity Should Be Every Food, Agribusiness and Beverage Leader’s Priority
March 3, 2025 12 mins

Why Pay Equity Should Be Every Food, Agribusiness and Beverage Leader’s Priority

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With growing global regulations and rising stakeholder and talent expectations, pay equity has shifted from a mere HR initiative to a top C-suite priority that goes beyond compliance.

Key Takeaways
  1. Pay equity has shifted to a C-suite imperative, affecting more than just HR compliance. It is now seen as a strategic way to offer a competitive advantage in attracting, retaining and engaging top talent.
  2. With no single standard for assessing, auditing or reporting pay equity, it can be difficult for organizations, especially multinationals, to navigate and comply with different requirements and expectations across multiple jurisdictions.
  3. Leading FAB organizations who understand the requirements and legislative framework are gaining an edge, while those without a strategy risk falling behind.

Margin, inflation, commodity price volatility and price pressures significantly influence human capital budgets in the food, agribusiness and beverage (FAB) industry. With a rising cost of living, many consumers have become increasingly price-conscious, creating a ripple effect across the whole supply chain. All supply chain links have been tasked with optimizing costs throughout their organization, which often trickles down to employees, affecting pay and making pay equity even more challenging. Combine these pressures with the increase in regulation, especially in the U.S. and EU, and it’s clear that achieving sustainable pay equity across an ever-changing organization is not a simple endeavor.

Despite this reality, many FAB businesses are looking beyond these difficulties and seeing pay equity as an opportunity to boost their employer brand, engage employees and gain a competitive edge in a challenging market.

What is Pay Equity?

Pay equity is a decades-old concept focused on ensuring workers receive equal pay for equal work or work of equal value — regardless of their gender, race, ethnicity or other legally-protected characteristics (where applicable). Pay equity actions generally aim to reduce or eliminate discrimination in pay practices so that fair compensation and benefits are delivered to all employees. While historically focused on reducing pay discrimination, recent societal shifts and new laws in the U.S. and Europe have made it a pressing business issue.

Why Pay Equity Belongs at the Heart of the FAB Industry’s C-Suite Agenda

As the global legislative framework on pay equity tightens, FAB organizations must give C-level attention to compliance. Laws like the EU’s Pay Transparency Directive set a new standard for pay equity, for example, by mandating a joint pay assessment where there is a gender pay gap within any category of worker of 5 percent or more and this cannot be justified on the basis of objective gender neutral factors.1 Beyond legal compliance, pay equity also provides a chance to align compensation with company values, strengthen culture and boost brand loyalty. Given the sector's unique challenges, such as fluctuating labor needs, intense talent competition and consumer scrutiny, FAB executives must prioritize pay equity as it directly impacts employee satisfaction and brand perception.

FAB organizations that delay addressing pay equity face multiple business risks, such as costly legal penalties, difficulty attracting talent, damaged reputation with stakeholders and loss of market share to more transparent competitors. Additionally, poor levels of compliance may expose business leaders to directors’ and officers’ liability.

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Achieving pay equity in the FAB industry can be particularly challenging due to the diversity of job roles, varying skill requirements, categories of workers and regional wage differences — complicating the standardization of pay structures.

Marinus van Driel
Partner, Workforce Transformation Advisory, North America

The FAB Industry Pay Equity Challenge

Pay equity presents significant challenges in the FAB industry due to complex workforce structures, international regulatory frameworks and fundamental data management hurdles. The dynamic nature of employment, corporate restructuring and market conditions make maintaining equitable pay an ongoing challenge, particularly in an industry characterized by diverse job roles and regional variations. As individual employees come and go, entities are acquired and divested, and market dynamics around pay change. Therefore, maintaining pay equity is a constantly moving target.

This challenge is further intensified by seasonality, tight margins, retailer demands and consumer price sensitivity, forcing businesses to balance immediate compliance needs with sustainable long-term solutions.

Other key challenges:

  • Integrated Team Collaboration

    Organizations must ensure the appropriate project team is engaged from the outset and remains involved throughout the project of a pay equity analysis. This team should include representatives from rewards, benefits, communications, talent acquisition and development. Additionally, it is crucial to have a member of legal counsel involved at every stage of a pay equity analysis project.

  • Data and Methodological Complexity

    Organizations face the dual challenge of accessing reliable compensation data and developing appropriate analysis methods. Pay equity analysis requires clients to use statistical modeling techniques and tools and critically organizations must work with their legal counsel to establish the methodology for delivering results or recommendations. The goal is to make sure that compensation is driven by legitimate factors like job type, experience, performance or geographic cost-of-living differences. The models can detect whether gender, race or ethnicity is playing a factor in compensation even after controlling for legitimate pay differences.

  • Workforce and Pay Practice Issues

    Blue-collar, production and warehouse workers, multilingual environments and heavy reliance on contract labor create unique communication challenges. Inconsistent pay practices, limited manager training on handling pay compression and performance-based compensation decisions also exacerbate the issue, increasing the risk of insufficient pay equity outcomes.

  • Regulatory and Strategic Pressures

    Organizations must navigate a complex web of varying international and local standards, with different rules for salary history inquiries, audit requirements and reporting obligations across regions. Regulatory complexity and legal, reputational and financial risks also impact environmental, social and governance (ESG) ratings, as well as talent retention, requiring a careful balance between compliance and strategic objectives.

Unpacking the Key Differences Between the U.S. and EU

Pay equity compliance varies significantly across regions, with varying analysis, auditing and reporting standards. From salary history inquiry restrictions in some U.S. states to pay audits in certain European countries, these disparities create complex compliance and data challenges, especially for multinational organizations. Here are some key differences to consider:

  • Terminology and Job Valuation

    The EU Directive focuses on "equal value" across roles, meaning organizations must compare and equalize pay across different jobs of similar value through formal evaluation frameworks. In the U.S., equal pay regulations emphasize "equal work" with the primary focus on ensuring equal pay for substantially similar or identical work.

  • The Burden of Proof

    The EU Directive places the burden on employers to prove non-discriminatory pay, while in the U.S., it falls on employees to demonstrate pay discrimination.

  • Focus of Analysis

    The EU Directive primarily focuses on gender equality in pay, while the U.S. expands to include ethnicity and other demographics.

  • Scope of Compensation

    The EU Directive examines total rewards, including benefits and pensions, while the U.S. primarily focuses on base and bonus compensation.

  • Category of Workers

    The EU Directive defines the category of workers as those performing the same work or work of equal value. However, it is up to the organization to establish and classify what the category of workers means in the context of their business. This creates a potential compliance issue unless a well-reasoned and justifiable rationale for this classification using job evaluation exists.

  • Reporting Requirements

    Reporting requirements vary across regions and regulations in the EU and the U.S. Reporting on a state level may be required in the U.S., while many EU Member States have gender pay gap reporting already, and the new requirements around pay equity reporting in accordance with the EU Directive are yet to be clearly defined.

The U.S. regulatory environment includes the Equal Pay Act, Title VII of the Civil Rights Act, the Equal Employment Opportunity Commission and the Office of Federal Contract Compliance Programs requirements for federal contractors, among other federal, state and local laws and regulators. These protections have been long-standing but evolving as the issue of pay equity has gained prominence in recent years.

The EU Pay Transparency Directive is altering how organizations are approaching country-level pay gap reporting. In the past, this was often managed on a country level. Now, organizations are centralizing visibility and ownership of reporting to ensure compliance, account for local complexity in reporting due dates and calculations and focus on the need to engage with different unions or works councils.

The Strategic Advantage of Pay Equity in FAB

While many organizations view pay equity as a regulatory requirement, some leaders in the FAB sector are leveraging it as a tool for transformation:

1. Talent Attraction and Retention

The FAB industry faces unique recruitment and retention challenges due to high turnover rates, seasonality, demand for specialist skills and margin challenges impacting compensation budgets. Competitive wage pressures from nearby businesses can drive pay equity evaluations, potentially helping organizations strategically adjust compensation to attract and retain talent, while mitigating long-term costs. In addition, transparent pay practices can also:

  • Build trust with prospective employees, who increasingly assess organizations for fair pay commitments
  • Improve offer acceptance and employee retention, reducing costs associated with turnover
  • Strengthen engagement among employees who value ethical and fair employment practices
2. Enhanced Brand Image and Customer Loyalty

FAB organizations know that their employer reputation is vital, especially as consumers and investors increasingly seek to support ethically responsible businesses. By demonstrating pay equity, FAB leaders can signal:

  • A commitment to fairness that resonates with a socially conscious consumer base
  • Alignment with broader ESG goals — a growing priority for many businesses in this sector
  • Leadership in social responsibility, enhancing consumer trust and loyalty
  • More capital from the investor community
3. Operational Efficiency and Innovation

The journey toward pay equity brings structured pay practices and clear role definitions. These are essential in a complex industry like FAB, where roles vary from manufacturing and logistics to grocery retail and food service. This shift drives:

  • A robust organizational structure with more defined career progression pathways that support long-term employee commitment
  • Improved data management, job architecture and decision making, enabling better workforce planning and salary budgeting
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The priority for clients now is to focus on all the data, including benefits and pensions, which are harder to access and analyze than pay compensation, as they tend to be more decentralized and less accessible . Additionally, knowing how to analyze the data can be complex.

Suzanne Courtney
Associate Partner, Talent Solutions, Europe, the Middle East and Africa

A High-Level Pay Equity Roadmap for FAB Leaders

Achieving pay equity requires a phased, strategic approach, particularly for the FAB industry with its diverse range of roles and fluctuating workforce. Here’s how many leading organizations are implementing a roadmap to achieve this with specialist guidance and tools:

Year One: Laying the Groundwork
  • Identify key risk areas against the requirements of the EU Pay Transparency Directive, the Equal Pay Act and other applicable U.S. law and create a roadmap for carrying out a pay equity analysis (if appropriate) with the support of key stakeholders (including legal counsel) while establishing clear accountabilities and timelines.
  • Conduct a baseline pay equity analysis specific to the FAB sector based on agreed parameters with key stakeholders including legal counsel.
  • Review job architecture and category of workers to ensure roles are clearly defined across production, service and management.
  • Assess compliance readiness and identify priorities.
  • Audit communications and plan training to communicate the importance of pay transparency across all levels.
Year One to Two: Building Structure
  • If required, implement a refined job architecture that addresses unique needs across all departments. Alternatively, document how the approach aligns with the criteria of the EU Pay Transparency Directive and the job evaluation requirements.
  • Modernize salary structures to reflect market rates, considering geographical and sector-specific benchmarks.
  • Develop a communication strategy to educate employees on pay equity benefits and build trust.
Year Three: Full Implementation Across Operations
  • Roll out transparent pay systems, focusing on all employee levels and roles in the supply chain.
  • Engage stakeholders, including employees and consumers, in the FAB brands’ commitment to transparency.
  • Establish a governance structure to ensure ongoing adherence and evaluate effectiveness.
Year Four to Five: Continuous Optimization and Reporting
  • Achieve full compliance with evolving legislative framework.
  • Monitor, report and adjust strategies based on feedback and performance metrics.
  • Maintain transparency as part of the organization’s brand identity and operational culture.

Critical Success Factors for FAB Organizations

Our work with leading organizations reveals several key success factors for implementing pay equity effectively in the FAB sector:

  • 1. Executive Sponsorship
    • FAB leaders must champion pay equity, as industry-wide impact relies on C-suite support.
    • Regular reporting to the board on pay transparency goals and progress is essential, backed by dedicated resources.
  • 2. Integration With Broader Talent Strategy
    • Pay transparency should align with diversity, equity and inclusion initiatives, supporting an inclusive company culture.
    • Incorporating Pay Transparency with the total rewards strategy (e.g., salary, benefits, career advancement) strengthens employee relations.
  • 3. Robust Data Management
    • Ensure accurate data collection, role-specific pay metrics and ongoing monitoring to uphold commitments.
    • Establish analytics capabilities that adapt to industry and market shifts, supporting fair and flexible pay structures.
  • 4. Change Management
    • Develop a strong communication plan that articulates the benefits of pay transparency, addresses employee questions and educates managers.
    • An external communications plan can help articulate the journey, findings, future plans, etc.
    • Engaged managers are crucial to translating pay transparency into daily operations, from hiring to performance reviews.
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The most successful FAB organizations treat pay equity not as a regulatory hurdle, but as a strategic advantage. They’re using transparency initiatives to modernize talent management, enhance their brand and drive operational excellence .

Ciara Jackson
Global Food, Agribusiness and Beverage Leader, Enterprise Client Group

For industry leaders, the question isn’t whether to address pay equity; it’s how to leverage it for strategic growth. Those who act decisively now will lead momentum in the sector, setting new standards for fairness and gaining a first-mover advantage.

The choice is clear: Lead the change or be forced to follow.

Aon’s Thought Leaders
  • Ciara Jackson
    Global Food, Agribusiness and Beverage Leader, Enterprise Client Group
  • Suzanne Courtney
    Associate Partner, Talent Solutions, Europe, the Middle East and Africa
  • Ray Henry
    Pay Equity Leader, North America
  • Marinus van Driel
    Partner, Workforce Transformation Advisory, North America

1 Commission welcomes the political agreement on new EU rules for pay transparency, European Commission


 

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